Residual value risk and EVs: Can asset finance be the safety net?

Do you know how much an electric vehicle (EV), or even your complete electric fleet, will be worth in three years? If not, your bottom line could be riding on guesswork. As companies electrify their vehicle fleets, future resale prices is a growing uncertainty.

In this blog we’ll explore key insights into why residual-value (RV) risk matters for electric fleets, how asset finance can mitigate that risk, and practical steps fleet managers can take.

We will also showcase three real-world success stories that demonstrate how tailored asset finance can accelerate electrification without jeopardising operational goals or burdening the balance sheet. These examples are complemented by insights from Stephen Lidgey, Equipment Portfolio Manager – Energy Transition, whose perspective on residual-value risk and the complexities of evaluating eMobility assets adds valuable context to the practical strategies explored in this article.

Why rapid EV technology change is driving residual-value risk

Vehicle technology, from high-capacity batteries to smart telematics and charging networks, is advancing so fast that today’s EV will be dated in just a few years. Combined with the growing supply of used vehicles, this rapid pace of change makes it increasingly difficult for fleet operators to predict future residual values – especially given the price volatility seen in recent years.

In mid-2024, industry data showed that price pressures were weighing heavily on used light-commercial vehicles across Europe, with battery-electric vans (BEV) among the worst affected. Newer BEV models’ rapid technical improvements, manufacturer discounting and the end of purchase incentives have all depressed asking prices and made de-fleeted electrics less attractive to buyers. If those resale values fall short of projections, companies can face surprise losses or higher lease costs – an especially acute problem for logistics, utilities, retail and public-sector fleets that depend on predictable total cost of ownership.

A recent study warns the uncertainty surrounding the residual values of zero-emission trucks (ZETs) poses a material challenge for financiers, making them increasingly risk-averse when it comes to financing clean-fleet investments. As the EV market has evolved, residual-value risk has risen sharply and become a core commercial concern for fleet operators. Asset finance, through tailored leases and risk-sharing structures, can act as a safety net, protecting, mitigating or transferring that risk before it lands on the balance sheet.

Expert Insight: Stephen Lidgey on Residual Value in eMobility

Evolving eMobility & volatile residual values

Advancements in eMobility range continue to accelerate rapidly. Only a decade ago, an EV with a 300+ mile range seemed like science fiction, with the median range for EVs in 2014 reaching only 84 miles. Today, the median new electric model easily exceeds 280 miles.

Beyond batteries, innovations like ultra-fast charging, vehicle-to-grid systems, and “smart” telematics are rolling out. This innovation boom not only improves fleet performance but also accelerates depreciation. Each new EV generation makes older models look less capable.

Transform your fleet financing with confidence by discovering DLL's approach to implementing telematics in financing  in our latest blog.

As JD Power’s Autovista data shows, three-year-old battery electric vehicles (BEVs) held only ~36–45 percent of their list price in April 2024 – well below plug-in hybrids or petrol trucks. Higher-speed charging and battery-swapping trials may soon make last year’s EVs feel obsolete.

As Stephen Lidgey of DLL’s Energy Transition team observes, “There have been a lot of start-ups bringing new technology into this space. Not all have succeeded, but every one of them has helped shape the evolution. Ten years ago, the idea of today’s EV range would have sounded impossible. The big question now is: What’s next? Whether it’s more efficient variants of what we have, or something completely new? When combining this with regulatory uncertainty it creates further uncertainty.” His point: each breakthrough changes the pricing curve, so fleet managers ask not “if” but “when” values will shift.

At the same time, market forces continue to make EV RVs volatile. According to Autovista’s mid 2025 forecast, BEVs remain under particular pressure – not only because of maturing technologies but also due to rising supply from several years of strong new car growth in the EV segment now entering the used vehicle market.

Autovista analysts cite several contributing factors: the removal of incentives in key markets, Tesla’s repeated deep discounts on new vehicles, and a growing influx of competitively priced Chinese EV brands like BYD and MG, which are driving down both new and used car pricing structures. Even large-scale defleetings, whether from personal vehicle rental fleets or commercial fleet operators, are adding to the supply glut and weakening residual values across the board.

In this environment, with residual value risk in EV fleets increasing, midsized and larger operators, from delivery couriers to public sector services, must find ways to electrify without overexposing themselves to depreciation volatility.

Explore how DLL is driving the electrification of GHE - your financial partner for a seamless transition to electric power, learn more in this blog.

How asset finance for EV fleets can mitigate residual-value risk

Asset finance (leasing and tailored lending) offers flexible ways to absorb or redistribute RV risk. Instead of buying vehicles outright, fleets can be purchased through operational leases, Fair-Market-Value (FMV) leases, or capital leases with balloon payments – each shifting the RV uncertainty in different ways.

• Operational lease: In this full-service contract, the leasing company retains ownership of the EVs for the entire term. The fleet pays predictable monthly fees and returns the vehicles at lease end. Any drop in EV market value then falls on the financier, not the operator as the ownership of the assets remains with the lessor, insulating the customer from depreciation.

• Fair-market-value lease: This usage-based lease typically gives the lowest payments and maximum flexibility. Customers simply use the vehicles and pay a fixed amount, with no purchase obligation at term-end. At lease-end the end-user has the flexibility to extend the lease, purchase the equipment at fair market price, return, or trade-in with new technology. For EV fleets, this means operators only cover usage, while the financier handles resale. If used EV prices dip unexpectedly, the financier – not the fleet owner – bears the loss.

• Finance lease with balloon (fixed purchase option): For firms planning to keep and eventually own the EVs, a finance lease can be structured with a predetermined end-value (balloon payment). The purchase price at term-end is fixed in advance, giving certainty to budgeting. Monthly payments are often lower (since some cost is deferred) and the company locks in the residual value. This option effectively makes the operator responsible for the final value, but it is known upfront. By choosing a conservative balloon price, a fleet can avoid lease-end purchase surprises.

Fleet electrification success stories

Accelerate fleet electrification with DLL equipment leasing solutions

DLL’s transportation finance specialists use deep market data and proactive asset management to try to mitigate EV residual value volatility. They regularly update RV projections based on global market trends and strong remarketing networks. If a certain EV model shows signs of steep depreciation, DLL can adjust leasing structures or offer upgrades mid-term.

DLL’s Life Cycle Asset Management team even provides services like battery health checks and certified pre-owned refurbishments to support resale demand. In practice, DLL often works with OEM partners and used-vehicle remarketers to plan second-life routes – for example by preparing first-generation EVs for export markets or battery recycling. This integrated approach promotes asset finance as a safety net: it absorbs shocks that pure ownership cannot.

DLL is a financing partner you can trust. This trust stems from DLL’s proven track record. With over decades in transport finance, DLL has collaborated closely with truck and van manufacturers, upfitting dealers and fleet operators. Its eMobility team participates in OEM test programs and retrofit consortia, gaining first-hand insight into emerging EV technology.

This knowledge feeds into each lease: setting RV targets, advising on service intervals, and optimising end-of-lease options. Even national initiatives, like policy incentives and credit guarantees, are part of our strategy for sustainable transport finance – but it’s the hands-on experience that truly makes the DLL difference.